Thursday, April 08, 2010

Invested most of my new Lending Club money in more investment loans, averaging 14.88%

My latest infusion of money into my Lending Club account became available today, a day earlier than I expected. It was only Monday that I initiated the transfer from my bank account in Lending Club. I was pleasantly surprised to see the email message from Lending Club in my inbox when I got back from my noon walk.

I decided to keep the size of each slice of investment in any individual loan relatively small, at $50. I started out with the goal of shooting for a return of about 16% on these loans, but there simply weren't enough of them that were already "Approved" which is a personal criteria that I use to assure quality and increase the odds that the loans will be issued and in a timely manner. About half of my new loans are above 15% and half below 15%, averaging 14.88%. That is below my ultimate goal of 15%, but I actually held back 10% of the new money so that I could try on another day to get a couple of loans up in the 18% range to see if I could move the average above 15%. After all, new loans are appearing on Lending Club every day.

Some of these loans were mostly funded so I should see them issued within the next couple of days. Others were fairly new and may take a week or more to become fully funded.

Here's a hoot: One is for debt consolidation for an investment banker at Citigroup here in NYC who has a six-digit salary. Excellent! Competing with Wall Street on Wall Street -- that's the way to stick it to the banks for all of the pain they caused so many of us. Yeah!

Even with this doubling of my total porfolio size, my Lending Club investment is still a modest size experiment. Even doubled again it would still be modest size. If all goes according to plan (not that I actually have a plan), by the end of the year I should finally have a real investment in Lending Club loans.

My goal continues to be a 15% return, but I figure I need a little buffer so that repayments (and maybe even defaults) don't push me below my goal too frequently. I may in fact keep pushing upwards with loans in the 16% to 18% range until I get my return up to 16% and then gradually work the average back to 15.5%. I was briefly above 15% a couple of weeks ago, but then I fell back to 14.88%. Yesterday I finally crept back up to 14.99%.

So far, my Lending Club portfolio has been perfect, with no delinquencies or even late payments. I started investing with Lending Club back in June 2009.

This is still just an experiment for me since I have no prior experience with this type of investment, but so far in has been very encouraging. I intend to double the size of the experiment in June or July (assuming my work income continues.)

-- Jack Krupansky


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